Invest in Gold – Five Ways to Buy and Sell It

The world’s markets are currently plagued by uncertainty. Russia’s continuing illegal invasion of Ukraine has further exacerbated the shortfalls and supply chain disruptions previously caused by the pandemic. These events led to spiralling inflation and stocks trading well below their previous highs. However, South Africa’s experienced investors do what they always do in times of crisis. They choose to invest in Gold. Based on the yellow metal’s longstanding history of consistent gains, they correctly perceive it as a safe haven. While it doesn’t pay dividends, it is a dependable means to store value. Anyone new to this market must understand the various ways to buy and sell Gold and their relative merits.

Futures

This option avoids the need to purchase the metal physically. Instead, it lets one speculate on future price increases. A relatively small sum can buy a lot of Gold futures. Hence the returns can be substantial when opting for this way to invest in Gold. On the downside, if the price should fall, you will need to pay more to maintain your futures contract or accept a loss. Furthermore, not all brokers offer this option.

Exchange-traded Funds (ETF)

Again, you will not hold physical Gold. Instead, an ETF tracks the progress of the commodity, rather like a stock, and is readily exchangeable for cash. These funds can also be risky but less so than futures. Also, when selling, you will only pay a small levy of less than one per cent, known as the expense ratio.

Mining Stocks

You could also invest in Gold by purchasing a share in one of the mines that produce it. Rising Gold prices mean more profits and a steady stream of dividends while you still retain your stock. However, mining is an inherently risky business. Smaller mines often struggle to operate profitably, but investing in a large, stable operation will cost you far more.

Stock-Owning ETFs

Purchasing this type of ETF can be a means to spread your investment across the market’s biggest mines and is a much cheaper option than buying their stock. Backing the top performers when you invest in Gold is less risky than buying shares in smaller mines. However, you should make sure which companies the ETF covers before proceeding. Furthermore, company performance alone is no guarantee of profits. Extraordinary market forces can sometimes affect an entire industry adversely.

Buy Bullion

When investing in Precious Metals, what could be more reassuring than holding them in physical form? You can choose between coins or Bullion bars in a range of weights to suit your budget, and you can monitor their value daily. Purchasing Krugerrands is now one of the most popular ways to invest in Gold, especially since the introduction of fractional denominations. Buying a 0,1-ounce coin each month can be a more profitable alternative to a savings account and will avoid the associated bank charges. While the price of the yellow metal occasionally falls, its overall tendency to gain value is well-established.

However, choose a trustworthy source if you decide to buy or sell Bullion. Mr K is an accredited dealer in Precious Metals, and one of the few authorised to purchase directly from the Rand Refinery. Learn more about our trusted Bullion products and safe custody service before you invest in Gold.

Disclaimer: The information above was derived from reliable sources and deemed accurate at the time of writing. However, changes following publication may have affected its accuracy. Such changes may occur without notice and Mr K cannot be held liable for inaccuracies in this article’s content or how a reader may choose to interpret it.